Sactown council OKs term sheet for new arena

After modest debate and four hours of public testimony, the Sacramento City Council voted 7-2 Tuesday night to give non-binding approval to a term sheetthat outlines the financing and construction of a $448 million entertainment and sports center downtown. The vote allows the city to proceed with its counteroffer to the sale agreement signed by Seattle native Chris Hansen in January to purchase the NBA Kings and move the team into KeyArena in the fall.

Both parties will have their proposals vetted April 3 in an unprecedented meeting with the NBA’s finance and relocation committees in New York.

Despite some community opposition to the $258 million public portion of the deal, which includes city-owned land valued at $38 million, the approval was not surprising given the urgency created by the NBA’s deadlines and Sacramento’s late start in response to the unexpected sale by the Maloof family that owns the Kings. After the April 3 meeting, NBA owners are scheduled to vote on the Hansen offer and relocation April 19.

When the protocol vote that wrapped up the meeting came to Mayor Kevin Johnson, he shouted “Let’s do it, Sacramento!” Cheers erupted in council chambers and a chant began: “Sac-ra-men-to! Sac-ra-mento!”

The council meeting was largely a civic pep talk for using the arena as the center of a downtown revitalization backed by four of California’s wealthiest investors, whose representatives met privately with council members Monday.

“Most cities would die for these people to come to their city and make this kind of investment,” said city manager John Shirey in his presentation. “This is something we’ve not been able to do in this city, maybe ever.”

Council members received the term sheet Saturday afternoon and had a relatively short time to study the document. No third parties had a chance for review. But the importance of the Kings to Sacramento’s local and national image became apparent, as well as the economic vulnerability of a city hit hard by the Great Recession.

Council member Steve Hansen, who voted against an arena proposal last year and was expected vote no again, switched because he thought the arena downtown would begin “a golden age” for Sacramento.

“We have an opportunity to have four billionaire say Sacramento is worthy,” Hansen said. “It’s been a long time since people validated us this way.

“Last year’s deal was one I could not support. This deal is for an arena downtown, which is an improvement. Last year the city was leveraged much more. This time we have well-capitalized investors. And we’ve successfully mitigated the risks to the public. . . I’m very pleased to support this deal.”

One of the numbers cited by Shirey revealed a startling fact about Downtown Plaza, the run-down shopping center that is the site of the proposed arena. Gross revenues for the mall were $218 million in 2000 and $112 million in 2012. The owners of most of the property, JMA Associates, spoke enthusiastically of the tear-down and build-up.

Hansen said he wished the deal was comparable to the lighter hits on the public exchequer engineered for stadiums/arenas by the pro sports moguls in Seattle, San Francisco and San Diego.

But council member Steve Cohn countered that the proposed arrangement will be looked upon by future cities funding arenas that will say, “That’s how you do a partnership . . . I’m not one who says we have to do anything to save the Kings. But I’m very excited about this.”

Some citizen opponents at the public portion said the issue should be subject to a vote and threatened to create a referendum, requiring 20,000 signatures, as well as litigation, if the arena project goes forward.

The mayor was undeterred.

“It’s a good day for Sacramento,” he said. “We are on track to do something very historic . . . we’re going to send a message to Seattle: We wish them well, they deserve a team some day, but we want to keep what’s ours.

“We have a chance to change the trajectory of this community for many, many years. This is our moment, our time.”

Monday, a fourth major investor joined the bid to keep the Kings. Vivek Ranadive, a Silicon Valley entrepreneur who joined the investors last week, told the Sacramento Bee the group has added the Jacobs family of San Diego, founders of Qualcomm, an international high-tech company listed in the Fortune 500. CEO Paul Jacobs and his brothers, Jeff and Hal, helps makes for “a dream team” of investors, Ranadive said.

The other members of the bidding group are Beverly Hills’ Ron Burkle, a grocery-chain billionaire, and Mark Mastrov of the East Bay, founder of 24 Hour Fitness, both of whom visited Sacramento to pitch their plan to council members and community leaders.

“Each person in this has the capacity to do this on their own,” Ranadive told the Bee. “This is about building a global brand. It’s about putting more wood behind the arrow.”

They were joined by project partner Todd Chapman, head of JMA Ventures, which owns most of Downtown Plaza.

Ranadive, who did not make the trip to Sacramento, said he is participating because he wants to do something big for Sacramento and California.

“I believe without a sports team, it is hard for cities to thrive,” he said. “I feel humbled to be given the opportunity to partner to keep this great franchise in this great city.”

YourThoughts

Michael Kaiser

The article says, “After modest debate and four hours of public testimony . . . .”
It looks like they do things a bit differently down there. However, I am not sure Sacramento is ever destined for a “golden age,” unless someone wants to talk about how hot it gets. I might live in Roseville or something, but Sacramento itself . . . . Still, good for them. It is such a second-rate city in the Bay Area scheme of things, probably closer to the Oakland end of the equation (in fact I would rather live in Oakland) than the San Francisco, San Jose, etc. end of the equation, excluding the fact that, of course, it is the capital of California, that it deserves a little something. Now we can work on getting a hockey team. Saw the Kings play down in LA recently. Good stuff. Although in all honesty I should say I also went and saw the Clippers, and my interest in basketball was peaked again for the first time in decades. If the Sonics could pull in a team like the Clippers . . . .

Jared S.

The arena here can’t happen without basketball, though. They can only start building with a basketball team (or both at the same time, which seems unlikely)

jafabian

If the NBA sees KJ’s group’s offer as financially secure I’m betting they’ll keep the team in Sacramento but give Hansen an expansion team even though the league says they don’t want to expand. How can they not? They’ll be betting a ton of money out of it.

art thiel

Tru dat.

NorCal Guns and Hoses

Thanks Art. I agree. I can’t see how the league lets two big time ownership groups not be accomodated. A win for everyone!

art thiel

Right. Hockey is an after-thought. Hansen claims the bldg still pencils w/out hockey.

NorCal Guns and Hoses

None of you have any idea what you’re talking about. I live in Roseville and go to Arco for all types of events. Unfortunately the Maloofs let Arco go to waste because they had no money to keep the old girl viable. We would have to go to neighboring venues for concerts because the sound system was not kept state of the art if you will. Also our region is not second rate. I love visiting Seattle but enjoy our areas small town charm. Also Art has confused Councilman Hanson with Councilman McCarty. Hanson was just elected. McCarty voted no last year as he did again last night. The Maloofs were good owners during the good times. I have been a season ticket holder since ’96. The Maloofs always told us to be patient…they would improve the team and loved our region and wouldn’t move. They never did and alienated alot of good folks who still put money in their coffers. We have a loyal fan base as do the Sonic faithful. I hope the league allows your region an expansion team or truly a franchise that is disengaged from their team. We as Kings fans have not lost passion in our team..only an ownership group that couldn’t come clean with their intents.

Gary

This story sounds so familiar except our owner and GM only took 5 years to grind the franchise into hamburger, take a look at how it has been doing since it left!!!
The other big difference is we had buffons for mayor and council members.

art thiel

Some of those CMs help craft the new deal. And I-91 did more damage than the pols.

art thiel

I stand corrected about Hansen, who was not in office for the Maloofs’ debacle, but he said during the hearing that he would have voted down that deal.

And I’ve always said the Sac fans were among the best in the NBA. The Maloofs failed team and town. May cowbells ring in their ears forever.

art thiel

And we kid Sactown, but it is close to cool things.

art thiel

Wow, Michael. If I didn’t know better, I’d say you were giddy.

As far as Sactown, it’s the rest stop between two cool places — SF and Tahoe.

jafabian

I believe at some point the NBA will be in San Jose. It’s the 10th most populous city in the US and the 3rd largest city in CA. If the Kings stay in Sacramento and if team ownership falters in anyway I believe the NBA will move them there. Especially if people like Larry Ellison are out there drooling over the prospect of having a new toy to play with in their hometown.

jafabian

Similar financing plans for sport arenas have been put together in other cities, specifically in Chicago and Cincinatti, and in those instances the public balked at how they worked. In Chicago it was felt that private investors were profiting at the city’s expense and in Cincy citizens actually got a court order to block it. Does Sacramento have the population to make this plan work? And being the one-trick pony that they are would the Kings have a consistent enough attendance record to support it? At least in Seattle with two other sport stadiums and an exhibition center within the vicinity a plan like this would work here but in Sac-town, hard to say.

Former detractors on supporting the Kings have changed their mind it seems. KJ must be really working things behind the scenes. Too bad that didn’t happen here.

The Maloofs have been quiet in all this. They could easily say thanks but no thanks and go with the Hansen groups offer. They’ve butted heads with KJ and might remember that. Also Hansen and his people might be prepared to up the ante with their offer. It’s a wait-and-see game on their part.

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